Explanation: Coordination is the process of aligning and integrating the activities, resources, and efforts of different units or individuals within an organization or a network of organizations. Coordination is a major problem for the global firm because it involves managing the complexity, diversity, and uncertainty of operating across multiple countries, cultures, and markets. Global firms face various challenges in coordinating their strategies, structures, systems, processes, and people, such as:
- Balancing the need for global integration and local responsiveness, which requires finding the optimal degree of standardization and adaptation of products, services, policies, and practices across different regions and markets.
- Managing the trade-offs between centralization and decentralization, which involves deciding how much authority and autonomy to delegate to the local units versus retaining at the headquarters or regional hubs.
- Fostering collaboration and communication across geographical, functional, and cultural boundaries, which requires overcoming the barriers of distance, time zones, languages, and norms.
- Leveraging the benefits of diversity and avoiding the pitfalls of fragmentation, which entails creating a shared vision, values, and culture that can unify the diverse and dispersed workforce and stakeholders.
- Coping with the environmental turbulence and uncertainty, which demands developing the capabilities to sense, respond, and adapt to the changing customer needs, competitor moves, and regulatory requirements.
Coordination is essential for the global firm to achieve efficiency, effectiveness, innovation, and competitiveness in the global market. However, coordination is not easy or costless, as it requires investing in various mechanisms and tools, such as:
- Formal structures and systems, such as organizational design, reporting lines, performance measurement, and control systems, that define the roles, responsibilities, and relationships among the different units and individuals.
- Informal practices and processes, such as culture, norms, values, and routines, that shape the behaviors, attitudes, and interactions of the organizational members.
- Information and communication technologies, such as intranet, email, video conferencing, and social media, that facilitate the exchange of information and knowledge across the organization.
- Human resource management, such as recruitment, training, development, compensation, and motivation, that attract, retain, and develop the talent and skills of the global workforce.
- Coordination by principles, such as mission, vision, strategy, and goals, that provide the direction, guidance, and alignment for the organization.
References: Practice coordination by principles: a contemporary MNC approach to …, Coordination Problems - Definition and examples — Conceptually, Emergence of Coordination in Growing Decision-Making … - Hindawi.
